When National Review published a special obituary issue on James Burnham soon after his death in 1987, perhaps the most remarkable contribution came from the pen of John Kenneth Galbraith. The Harvard economist reminisced about the eager welcome with which he and fellow New Dealers in the Roosevelt administration had received Burnham’s The Managerial Revolution: What is Happening in the World when the book was first published in 1941. “Here in lucid detail,” wrote Professor Galbraith,
was the full exploration—economic, social, political—of the case Berle and Means had made. Here was the world that Marx’s imperative of capitalist concentration had foretold. But here, beyond Marx, was the world in which the capitalist, in turn, had been relegated to a bystander role. The dividends still came; the power had gone. . . .
The Managerial Revolution was widely read and discussed. . . . I was persuaded of its importance by Washington colleagues in 1941 amidst all the pressures of wartime price control, for which I had just assumed responsibility.
Professor Galbraith’s recollections are remarkable because it was the central prophecy of The Managerial Revolution that the New Deal was the womb where an embryonic totalitarian order was being hatched, an order of the same nature as similar New Deals in Hitler’s Germany and Stalin’s Soviet Union. If indeed the apostle of postwar American liberalism and his colleagues in the Roosevelt administration welcomed that prophecy, then he perhaps let slip a secret of state that was never intended for the ears of the vulgar.
For most of the 50 years since the publication of The Managerial Revolution, the architects and high priests of the managerial state have made it their business to deny, ignore, or curse the prophecy. C. Wright Mills and Hans H. Gerth savagely reviewed the book when it was published, though much of what Mills himself later wrote in The Power Elite resembled some of Burnham’s formulations, and it received all the wrath of Bolshevism scorned from the apparatchiks of both the Trotskyist and Stalinist wings of the movement. Various writers have often insinuated or even openly stated that Burnham plagiarized his ideas from an obscure left-wing nut named Bruno Rizzi, though the accusation has now been definitively disproved. Throughout the copious literature on the American corporate economy, Burnham’s name is still invoked, but usually with disclaimers of distance, distaste, and embarrassment.
Certainly there was much to criticize in Burnham’s formulation of the theory of The Managerial Revolution. The book, in its origins, grew out of a protracted polemical conflict among the Trotskyists, with whom Burnham had been joined from 1934 to 1940, and Marxist ideology, especially a crude economic determinism, still colored much of his thought. Moreover, Burnham made the error of assuming that certain contemporary political trends of the 1940’s—German military successes in the early part of World War II and the creation of various agencies in the New Deal—were permanent, and when the Germans lost the war and several New Deal agencies were abolished after Roosevelt’s death, Burnham’s critics seized upon these developments to argue that his prophecies and analysis had been discredited. Finally, Burnham wrote in an aggressive, not to say brutal, style that was often too dismissive of critics and alternative social theories, and he expressed his own thesis in schematic and sometimes poorly defined language. To a large extent, these flaws also derived from several years of immersion in Marxist polemics, the literature of which is permeated by the same vices.
Nevertheless, for all its errors. The Managerial Revolution uncovered what is one of the central truths of the 20th century and elaborated it into an interpretation of the present age, and despite the criticisms leveled at it for the last half century, it has exerted a profound influence on subsequent social and political thought. Not only do the works of Galbraith, Mills, Daniel Bell, Robert Nisbet, and Peter Drucker owe a large debt to Burnham, but also Karl Wittfogel wrote in Oriental Despotism that “social science is indebted to James Burnham for pointing to the power potential inherent in managerial control” and expressed his own “appreciation of the contribution made by Burnham through his concept of managerial leadership.” Jacques Ellul also acknowledged Burnham’s influence on his own thought in The Technological Society, and David Riesman in The Lonely Crowd could write of “Marx, Mosca, Michels, Pareto, Weber, Veblen, or Burnham,” placing him and his work in the same category as the major social thinkers of the last hundred years. It is now well established that George Orwell, who wrote two long essays on Burnham in the 1940’s, based Nineteen Eighty-Four on the prophecies of The Managerial Revolution, and in one form or another Burnham’s ideas have been recapitulated by dozens of writers, thinkers, and scholars in several different fields.
The theory of The Managerial Revolution as Burnham formulated it in 1941 holds that Marxism is correct that capitalism, in the sense of privately owned and operated business enterprises seeking profit, is historically in decline. It disagrees with Marxism that what is replacing capitalism and the society capitalism created is a socialist order in which the proletariat will rule. Instead of socialist revolution, Burnham argued that the managers of large corporate firms were beginning to form a new ruling class and that they would merge with similar groups in the modern bureaucratic state. The result would be an order in which the state and the economy would be “fused.” Formal nationalization of the means of production might or might not occur, but the reality, apart from the formal and legal arrangements, would be a monolithic concentration of power in the hands of the dominant managerial class in state, union, and corporation.
One of the foundations of this theory was the 1933 work of Adolf A. Berle and Gardiner G. Means entitled The Modern Corporation and Private Property. Berle and Means had argued that modern corporate businesses were no longer controlled or operated by their owners (stockholders), partly because the stockholders were too dispersed to exercise direct control and partly because they lacked the necessary technical expertise to direct the corporation intelligently. Those who actually did direct the corporation were the managers, and they gradually assumed de facto control from the stockholders by virtue of their superior expertise and through their manipulation of modern corporation law.
Burnham believed that Berle and Means’ work confirmed his own theory, though they had discussed “management” only in the formal, legalistic sense of those who sit on the corporate boards of directors. It was Burnham’s innovation to extend the concept of “manager” beyond this narrow, legalistic meaning to refer to anyone who possessed technical skills that are applicable to social, economic, and political functions. The “managers” in Burnham’s sense thus included “administrators, experts, directing engineers, production executives, propaganda specialists, technocrats,” and such managers had little incentive to preserve private property because they held their position not through ownership (as had the old capitalist entrepreneurs or the corporate stockholders) but by virtue of their technical expertise. Hence there was at least a latent conflict of interest between the stockholders (and any other social group with interests in private property) and the managers. The perception of this conflict was not original with Burnham. Berle and Means had also emphasized it, and it was noted by John Maynard Keynes and indeed by both Adam Smith and Karl Marx in discussions of the joint stock companies of early capitalism.
Burnham also argued, again parallel with Marxism, that the displacement of one ruling class based on private property by a new class based on technical skills would have profound social and political implications, and it was precisely those implications that were the most controversial and the most disturbing parts of The Managerial Revolution. Capitalist society had developed a limited state, parliamentary government, organization in the form of sovereign nation-states, and a dominant “belief-pattern” of individualism in the economy, art, morality, religion, and social manners. These institutions reflected the interests and beliefs of the dominant capitalist ruling class, which needed a limited government that its representatives could control and found an ethic of individualism useful as a rationale for its own economic interests.
Once the capitalist class had been overthrown, Burnham argued, there would be no further need for these institutions and beliefs. The new managerial class would demand a collectivist economy, an unlimited state, a government controlled by bureaucratic administrators justifying itself through formulas of scientific and rationalistic efficiency rather than government by parliamentarians operating on the basis of legal and constitutionalist codes, a transnational or global organization in place of national sovereignty, and an ethic of collectivism that would emphasize the duty of the individual to conform and subordinate his interests and identity to those of some larger collective category—the party, the race, the people, the class—which in reality was simply an abstraction that disguised the interests of the ruling managerial elite. The phrase “managerial revolution” has survived in economic textbooks mainly to refer to the “separation of ownership and control” that both Burnham and Berle and Means noted, but in Burnham’s usage it refers not only to this process by which managers come to dominate owners and stockholders but also to the whole social, political, and cultural revolution that he predicted would ensue from managerial rule.
Burnham interpreted the events of the 1930’s in terms of this theory. Contrary to what Trotsky maintained until his death, Stalinist Russia was not a “workers’ state” that was temporarily deformed by Stalin’s dictatorship but was a fully developed managerial state in which the logic of the revolution had been carried to its full extent of totalitarianism. Similarly, collectivist organization in Nazi Germany also represented the coming to power of the managerial class of the National Socialist Party in opposition to the old ruling class of Junkers and the incompetent administrators of the Weimar Republic.
In the New Deal, Burnham saw the beginnings of a similar regime in the United States. The New Deal relied on the Caesarist leadership of Roosevelt in much the same way that Russia and Germany relied on that of Stalin and Hitler. It created a large bureaucracy in the federal executive branch, and it sought to override congressional, state, and local authority with the centralized power of the New Deal administrative agencies and to manage the economy through these agencies. It allied with various “progressive” businessmen and managers in modern corporations against smaller and older forms of entrepreneurial capitalism, and it sought to rationalize or justify its power through an appeal to democratist, collectivist ideologies that challenged and rejected the classical liberal formulas of the old entrepreneurial bourgeois class. “The fact of the matter,” Burnham asserted,
is that the New Deal’s liberalism and progressivism are not liberalism and progressivism in the historical meaning of these terms; not, that is to say, capitalist liberalism and progressivism. Its progressivism, if we wish to call it that, consists of the steps it takes toward managerial society.
Internationally, Burnham saw World War II as “the first great war of managerial society,” in which the managerial superpowers would contend for world domination. Managerial elites existed in those areas of the globe in which advanced industry flourished, which Burnham identified as Western Europe, the United States, and Japan, and these states or transnational blocs under their control would be the main contestants in the struggle for the world. The nation-state would no longer be a useful form of collective organization, and “the comparatively large number of sovereign nations under capitalism is being replaced by a comparatively small number of great nations or ‘superstates,’ which will divide the world among them.” Sovereignty will cease to exist or be restricted to the superstates. Burnham’s conclusions about the future of the world were thus pessimistic: the managerial states would be totalitarian internally and imperialistic externally, and they would plunge the world into global wars until one or some of them had subdued it. He saw the new managerial class as being driven not by ideas (which it used only for its own convenience) but by the economic logic of the technical skill by which they held power in the mass economic, political, and social organizations they controlled.
If this was the world that the young Mr. Galbraith and his comrades were so eager to construct, Burnham himself made clear that he was not advocating or supporting what he predicted. “I have no personal wish to prove the theory of The Managerial Revolution true,” he wrote. “On the contrary, my personal interests, material as well as moral, and my hopes are in conflict with the conclusions of this theory.” In his second book. The Machiavellians: Defenders of Freedom (1943), Burnham recast the theory, excising the Marxist and economic determinist elements and reformulating the same predictions in a framework drawn from the classical theory of elites of Vilfredo Pareto and Gaetano Mosca. In a preface to a 1960 reprint of The Managerial Revolution, the older Burnham (he had been 36 when the book was originally published in 1941) acknowledged that his original expression of the theory “now seems to me too rigid and doctrinaire. . . . Events have proved some propositions—particularly some of the political as distinguished from the sociological and economic conclusions—wrong or incomplete.” He believed the prediction of a struggle for the world among “a small number of great political aggregates, or superstates, has been confirmed,” but today, he wrote, “I would allow for a greater range of variation within the general managerial form.”
Yet not all of Burnham’s later qualifications may be called for. Obviously, there were flaws in Burnham’s predictions, but it is impossible to read The Managerial Revolution today without a haunting sense of familiarity. Nazi Germany and Japan were defeated, but the United States and the Soviet Union soon emerged as the dominant superstates of the postwar world, and regional and transnational alliances, organizations, and security pacts took over some of the actual functions of traditional nation-states. The New Deal agencies were abolished, but new agencies soon came into being that managed and manipulated the economy and society in much the same way or in even more radical ways, and smaller independent businesses and the social and cultural order associated with entrepreneurial capitalism continued to wither as the bureaucratic, centralized state and the bureaucratized managerial economy continued to coalesce. Congress and states were not abolished, but the “imperial presidency” has flourished almost continuously since Roosevelt’s day and has relied on an ever growing number of bureaucrats rather than elected officials as its core. Collectivist formulas have also flourished, and the individualist ideas and belief patterns of premanagerial society have been all but forgotten or have been conveniently reinterpreted to suit the new social, political, and economic realities. Regardless of Burnham’s errors, then, it ought to be obvious that he was essentially correct in the substance of his prophecies.
It is possible, of course, to argue that Burnham’s analysis—his explanation of various historical trends towards bureaucratization, collectivism, globalism, etc., in terms of the interests of an emerging managerial elite—is either wrong or irrelevant to his correct perceptions and predictions of the trends themselves. Acceptance of the connection between his analysis and his predictions depends in part on the degree to which the analysis itself can be empirically substantiated and in part on the extent to which elite theory in general is a persuasive framework for explaining, predicting, and evaluating social reality. Nevertheless, while Burnham was correct to abandon the crude economic determinism of his original formulation, the core of his theory remains a powerfully suggestive conceptual tool for understanding not only what was happening in the world in 1941 but indeed what is happening now. Retaining this core, it is possible to reformulate the theory of The Managerial Revolution with the necessary modifications to make it a useful framework for interpreting contemporary as well as historical events.
First, there is considerable empirical confirmation of Burnham’s view of the bureaucratization of the economy in the work of Alfred D. Chandler, Jr., whose The Visible Hand: The Managerial Revolution in American Business (1978) is a massive documentation of the elements of the Berle-Means-Burnham thesis with reference to the displacement of entrepreneurial owner-operators and stockholders by professional, technically skilled managers as the dominant leadership stratum in the American corporate economy. Second, Burnham’s extension of the concept of “manager” to include not only corporate executives in Berle and Means’ legalistic and formalistic sense but also any technically skilled professional operating in large-scale organizations, economic or political (or indeed cultural) offers a unifying concept around which a theory of a managerial elite may be built.
As organizations grow in size, assets, the number of personnel, and the number and complexity of their operations, they cannot be operated or controlled apart from technical skills in the form of scientific, engineering, administrative, economic, or legal expertise. Legal ownership of property or formal occupancy of political office is irrelevant to the acquisition and application of such skills, so that property owners and officeholders per se cannot by virtue of ownership and officeholding exercise the technical skills necessary for the operation of mass organizations. Those who acquire technical skills relevant to organizational activities thus also acquire effective control of the organization. There is no reason, of course, why stockholders or owner-operators, for example, cannot acquire technical skills themselves and thereby perpetuate their own control of the corporations, but, as Burnham predicted and as Chandler shows, the entrepreneurial upper class for the most part simply did not do so. Its members continued to own large amounts of stock and to derive considerable wealth from it, but they did not take part in the actual management of the corporate organization. As Galbraith says, “The dividends still came; the power had gone.” And, in the extended sense of manager that Burnham used, a similar displacement of elites took place in the state, where technically skilled professional bureaucrats and staffs rather than the formal officeholders they ostensibly served, actually planned and implemented the functions of the managerial state.
But the separation of ownership and control in the corporation and the separation of formal office and actual control in the state does not mean merely a division of interests between owners and officeholders on the one hand and managers on the other. It is the interest of the managers to preserve and enhance those features of the corporation and state that require technical and managerial skills and therefore to encourage the further enlargement, centralization, and bureaucratization of these institutions. Moreover, insofar as these features come into conflict with the small-scale, localized, and personal framework of traditional institutions and beliefs, it is the common interest of the The managerial interests are served by collectivist and social-rationalist ideologies that de-emphasize the individual, the personal, the local, and the particular and champion the collective, the impersonal, and the universal. managerial elites in state and corporation to abolish, diminish, or delegitimize them.
Hence, the managerial revolution is not merely the replacement of one set of leaders, the “Ins,” by another, the “Outs.” It is the basis for an organizational revolution in the size and scale of the economy and the state and for a cultural revolution in the normative belief-patterns of society as well. The traditional political, social, and ethical ideologies that served premanagerial society—individualism, classical liberalism, constitutionalism, states’ rights, personal moral responsibility, etc.—will not serve managerial elites. The managerial interests are served by collectivist and social-rationalist ideologies that de-emphasize the individual, the personal, the local, and the particular and champion the collective, the impersonal, and the universal. Since largescale organizations (what Pitirim Sorokin called “colossalism”) must operate in many different subcultural environments and political jurisdictions, they tend to dissolve and homogenize local cultural variations and local political autonomy into a uniform, centralized, and collective mass, and the ideologies they promote reflect this tendency in the form of political and social egalitarianism, democratism, and universalism. The triumph of such managerial ideologies is due not to the decadence of traditional beliefs and those who adhere to them but to the rise of a new social group in the form of a managerial elite that sponsors and promotes them in its own interests.
Among the social and political phenomena for which the theory of The Managerial Revolution offers a unified conceptual explanation is the conflict between left and right in the United States since the New Deal era. Until recently, the mainstream of American conservatism has been closely linked with the defense of premanagerial (mainly bourgeois) institutions and belief-patterns and with resistance to managerial political, economic, and cultural forces, which, as Galbraith understood, have been centered on the political left. The theory implies that the left-right conflict is not merely a conflict of political parties, candidates, and ideologies but also a struggle between a declining (bourgeois) elite and an ascending (managerial) elite over the issue of which one will direct the course of American life. Hence, a political movement of the right that espouses premanagerial goals or seeks to resist managerial agendas cannot expect to achieve these ends simply by promulgating ideas or winning elections within the organizational framework of the managerial regime. It must seek to displace that framework and the elite that controls it.
The theory also offers a sociological morphology for such concepts as Hilaire Belloc’s “servile state” and related ideas of 20th-century political and social theory. Most such ideas perceived that the cultural and intellectual disorder of the century was closely related to transformations in organizational life, but few have pursued the relationship as closely as Burnham did. It ought to be clear that the corollary of the thesis that a managerial elite has become the dominant social and political force through its control of mass organizations is that premanagerial bourgeois elites and their supporters have been demoted to the status of a new “proletariat,” displaced from political and cultural hegemony, dispossessed of the independence that their property-based order permitted, and subsumed in the mass economic, political, and cultural organizations of the managerial regime. It is noteworthy that Southern Agrarian Allen Tate, in an essay in Who Owns America? (1936), the sequel to I’ll Take My Stand, cites Berle and Means’ work on the corporation as the empirical ground of his thesis that “there is a point at which effective ownership ceases, although the legal fictions sustaining ‘property’ may hold that beyond that point ownership endures. . . . a defender of the institution of private property will question not only the collectivist State, but also large corporate property.”
Burnham himself did not believe that organized resistance to the emergence of a managerial regime was practical. He regarded its emergence as historically inevitable and irreversible, and he thought that the most conservatives could accomplish would be to ensure the survival of premanagerial ideas of liberty, law, and civilization within a managerial system. In the last 50 years, nothing has occurred to suggest that either his basic analysis or his belief in the irreversibility of the process he analyzed is false, and until some social force appears that is able to challenge the managerial system and offer an organizational alternative to it. Professor Galbraith and his colleagues in the New Deal will have good reason to celebrate.